Tariffs and U.S. Politics: A Historical Perspective Amidst Current Controversies

In today’s politically charged climate, the debate over tariffs—taxes imposed on imports—continues to stir controversy, reflecting deep divisions in American economic policy. Despite widespread voter concern over inflation, both major political parties have shown varying degrees of support for tariffs.

Former President Donald Trump has vowed to significantly increase tariffs on Chinese goods and apply broad tariffs on imports from other countries, a move that aligns with his economic nationalist stance but complicates his claims of addressing inflation. Meanwhile, Vice President Kamala Harris has criticized Trump’s tariff strategy as a detrimental tax, although President Joe Biden has retained many of the tariffs introduced during Trump’s presidency. Recently, the Biden administration announced new tariff increases on Chinese products, including electric vehicles and solar cells.

To provide historical context on the role of tariffs, we spoke with Douglas Irwin, a Dartmouth College economics professor and author of “Clashing over Commerce: A History of U.S. Trade Policy.” Irwin offered insights into how tariffs have evolved in U.S. history and their impact on current economic debates.

Irwin outlined three key eras of tariff policy in the U.S. Before the Civil War, tariffs served as a primary source of government revenue, replacing the lack of income and sales taxes. They were collected efficiently at the nation’s few ports and used both to fund government expenses and protect domestic industries from foreign competition. After the Civil War, as new taxes emerged and the introduction of income tax during World War I reduced the revenue role of tariffs, their use shifted primarily towards protecting domestic producers.

By the Great Depression, tariffs began to be used as tools for reciprocal trade agreements, leading to the formation of institutions like the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), aimed at reducing global tariffs and fostering trade.

Irwin also addressed Trump’s reverence for former President William McKinley, who was associated with the McKinley Tariff of 1890. Contrary to Trump’s portrayal, Irwin notes that McKinley was moving towards reducing tariffs and promoting reciprocal trade before his assassination in 1901.

Today’s tariff debates mirror historical tensions between protecting domestic industries and promoting free trade. While Trump proposes high tariffs reminiscent of the 19th century, they differ in targeting specific countries rather than a uniform rate across all imports.

Historically, tariffs were intended to generate revenue and shield local businesses, but as the U.S. economy evolved, their role diminished. The debate continues today, reflecting a broader struggle between economic nationalism and free trade principles, a divide that has persisted throughout American history.